Capital Relief Trades

Capital relief trades are deals put together by banks to sell on to investors to reduce the bank's regulatory capital requirements. Such deals can take many forms, but SCI focuses on those where synthetic or securitisation structures are utilised. Those deals can be broken down into the following broad categories (deals can be combinations of these categories): CDS - credit default swaps: in the capital relief trade context, this denotes deals that utilise such instruments to transfer credit risk. CLN - credit-linked note: in the capital relief trade context, this denotes the deal is structured as a note with an embedded credit derivative. Fin gtee - Financial guarantee: a means of structuring a capital relief trade, whereby the investors benefit from a guarantee that all the issuer's obligations will be met. Funded: where a capital relief trade is understood to have been structured using a credit derivative (CDS, CLN, synthetic CDO etc) with the protection seller making an initial payment. Unfunded: where a capital relief trade is understood to have been structured without an initial payment being made under the credit derivative (CDS, CLN, synthetic CDO etc). True sale: a capital relief trade based on a cash securitisation structure rather than a synthetic securitisation structure.


  • Drafting issues

    Assia Damianova, special counsel at Cadwalader, Wickersham & Taft LLP, considers the potenti...

    CRTs typically consist of a credit transfer instrument entered into between the credit institution a...

    Talking Point    11 May 2020
  • EC decision awaited

    Preferential capital treatment mooted for STS synthetics

    The EBA’s framework for STS synthetic securitisations (SCI 6 May) is broadly in line with...

    News Analysis    7 May 2020
  • CRM tool

    CBILS guarantees eligible for CRR recognition

    The UK PRA published at the end of April a statement clarifying whether Coronavirus Business Interru...

    News    7 May 2020
  • Risk transfer round-up - 7 May

    CRT sector developments and deal news

    BBVA is rumoured to be readying a capital relief trade for 2Q20. The lender has completed a total of...

    News    7 May 2020
  • STS synthetics proposals published

    Sector developments and company hires

    STS synthetics proposals published The EBA has published its proposals for developing an STS framew...

    Market moves    6 May 2020
  • Romanian SRT inked

    Uncapped guarantee completed

    The EIF and nine Romanian banks have completed an uncapped guarantee agreement from the SIUGI progra...

    News    5 May 2020
  • Ratings resilience

    Shorter pro-rata periods to benefit SRTs

    A sharp deterioration in asset performance due to the coronavirus fall-out may lead to sequential pa...

    News    5 May 2020
  • WAM guidelines finalised

    Sector developments and company hires

    WAM guidelines finalised The EBA has published its final guidelines on the determination of the wei...

    Market moves    4 May 2020
  • SCI Start the Week - 4 May

    A review of securitisation activity over the past seven days

    Last week's stories Cautiousness prevails European CLO market update CRT vol aims for the sta...

    News    4 May 2020
  • CRT vol aims for the stars

    No longer staid and dependable, the CRT market is at record-breaking volatility

    Despite a levelling out in April, volatility in the credit risk transfer market remains extremely el...

    News Analysis    2 May 2020
  • Risk transfer round-up - 1 May

    CRT sector developments and deal news

    Deutsche Bank is rumoured to be readying a large corporate capital relief trade for 2Q20. The bank&a...

    News    1 May 2020
  • Landmark guidance

    Implicit support guidelines published

    The EBA has published landmark implicit support guidelines as part of its post-coronavirus intervent...

    News Analysis    1 May 2020
  • Prudential flexibility reiterated

    Sector developments and company hires

    Prudential flexibility reiterated The European Commission has adopted a package to help facilitate...

    Market moves    29 April 2020
  • Opportunistic buying

    Covid-19 kicks off secondary SRT market

    Capital relief trade secondary market activity has received a boost from the coronavirus fallout as...

    News Analysis    28 April 2020
  • SCI Start the Week - 27 April

    A review of securitisation activity over the past seven days

    Last week's stories Accessing liquidity The role technology plays in securitising trade finance...

    News    27 April 2020
  • Recovery boost

    Weatherford revolvers fully repay amid negative outlook

    A new case study from SCI has revealed that oil and gas firm Weatherford International is referenced...

    News Analysis    24 April 2020
  • SCI Start the Week - 20 April

    A review of securitisation activity over the past seven days

    Last week's stories Bilateral activity Opportunistic capital redeployment underway Coverage...

    News    20 April 2020
  • Forbearance risks

    Pre-2015 GSE deals could suffer losses

    As the coronavirus spreads and servicers offer mortgage forbearance plans to struggling obligors, ce...

    News    17 April 2020
  • Discounted opportunities

    Insurers target SRT secondary market

    Insurers are now targeting the capital relief trades secondary market in search of discounted opport...

    News    16 April 2020
  • Bilateral activity

    Opportunistic capital redeployment underway

    The European ABS market appears poised to diverge between central bank-eligible issuance and opportu...

    News Analysis    15 April 2020
  • Risk transfer reboot

    Large corporate SRTs prepped

    Capital relief trade issuance is set for a comeback in 2Q20 as a handful of banks are readying large...

    News Analysis    14 April 2020